Providing childcare for all one to four year olds could be worth around £40 billion to society, according to a new economic analysis.
Moving towards universal childcare could bring immediate significant benefits in terms of higher female employment and earnings, said the report by economists from PricewaterhouseCoopers.
In the longer run, there would be additional benefits in terms of increasing the lifetime earnings of mothers who would not need to take prolonged career breaks, as well as possible benefits to the future productivity of children from less advantaged backgrounds, who would receive good quality pre-school childcare under the scheme.
The report, published as a policy paper by national childcare charity Daycare Trust, is the first study to quantify the potential economic costs and benefits of universal pre-school childcare over the full working lifetime of both the parents and the children affected by the policy.
Stephen Burke, Director of Daycare Trust, said: "We can create a lasting legacy of children's centres in every community, providing childcare and early years services that every family can use.
"This report provides a childcare challenge for the Government - clearly in the long term the benefits of investing in quality childcare for children, parents and the whole country will pay huge dividends."
Over the first 20 years, during which it is assumed that universal childcare would be phased in, the study estimates that the overall economic benefits to society would broadly match the overall costs of provision.
However, the long-term net benefits could accumulate to around £40 billion over a 65-year period although these estimates are subject to significant uncertainties, particularly in relation to the increase in female employment resulting from the move to universal childcare provision.
David Armstrong, senior economist in PricewaterhouseCoopers Belfast office and co-author of the report, said: "It may be that the benefits of investing in childcare and pre-school learning could be greater than investment in education at later ages, given that a very significant part of cognitive and non-cognitive skills development occurs before children start school.
'Universal pre-school childcare provision: towards a cost-benefit analysis for the UK' (Facing the Future Policy Paper No.7) is available price £10 (incl p&p) from Daycare Trust, 21 St George's Road, London SE1 6ES; tel: 020 7840 3350.
